Toyota to Spend $500 Million on U.S. Plant Revamp as Sales Drop

Discussion in 'Wall St. News' started by ASusilovic, Jul 5, 2009.

  1. July 6 (Bloomberg) -- Toyota Motor Corp., grappling with excess North American plant capacity as sales wither, plans to spend about $500 million to upgrade an Indiana SUV-assembly plant, its biggest single such investment this year.

    Toyota has budgeted 48.4 billion yen for the Princeton, Indiana, project, out of its 830 billion yen global plan for factory upgrades, it said in a filing to the U.S. Securities and Exchange Commission on June 24. The amount was listed on page 43 of a 174-page document.

    The 11 year-old factory will build Highlander sport-utility vehicles, sales of which plunged 41 percent in the U.S. in the first half. Compounding a record 436.9 billion yen loss last year and its forecast of a bigger drop this year, Toyota faces debt service costs on an idled Mississippi plant and possible charges from General Motors Corp.’s exit from a joint California plant.

    “Given the current situation, the scale seems large,” said Mamoru Kato, a Japan-based analyst at Tokai Tokyo Research Center. He wasn’t previously aware of the amount.

    The budget for Princeton is at least double the $230 million Toyota spent to add a Camry sedan assembly line in 2007 at affiliate Fuji Heavy Industries Ltd.’s Subaru plant in Indiana. It’s also nearly as much as the $550 million that rival Honda Motor Co. spent to construct an entirely new U.S. plant that opened last year, also in Indiana.

    The investment is for “retooling of the West Plant to build Highlander and Sequoia on the same line, as well as supplier tooling for Highlander,” said Mike Goss, a spokesman for Toyota’s North American manufacturing unit in Erlanger, Kentucky.

    Wow, there are still companies investing in the US !:)